[Vietnam Biz – Part 10] Electronics manufacturing industry: Four conditions determined for tax incentives

Under the new Corporate Income Tax (CIT) Law that came into effect in October 2025, the tax incentives previously granted to manufacturing companies located in industrial parks (two years of corporate income tax exemption followed by a 50% reduction for the subsequent four years) were reviewed and limited to specific industries. The conditions for eligibility have now been clarified.

According to an announcement by Vietnam’s Ministry of Science and Technology, there are four conditions that electronics manufacturing companies must meet in order to receive corporate income tax incentives. If even one of these conditions is satisfied, the company will qualify for the incentives, which will be applied starting from January 2026.

1. The first condition is that the company uses semiconductors for which design rights are held by domestic organizations or individuals, or semiconductors that are manufactured, packaged, or tested at factories within Vietnam.

2. The second condition is that the company has a research and development (R&D) department consisting of at least 10 personnel with a university degree or higher, with more than half of the department’s staff being Vietnamese nationals. For small and medium-sized enterprises, the requirement is at least three such personnel. In addition, the company must have spent either at least 2% of its average net sales over the past 3 years (or at least 1 year for companies in operation for less than 3 years), or at least VND 200 billion per year (approximately JPY 1.175 billion) on R&D for three consecutive years (or at least 1 year for companies in operation for less than 3 years).

3. The third condition is that the company holds design rights for electronic products. Companies are eligible if specifications, system architecture, circuit diagrams, printed circuit board (PCB) layouts, and similar elements are designed in-house. Designs for which rights have been acquired from external parties are also eligible.

4. The fourth condition is that the company has established a domestic supply chain and carried out technology transfer. At least 30% of the total number of companies involved in product manufacturing (including the supply of components and raw materials) must be Vietnamese companies. In addition, within 5 years from the issuance date of the investment registration certificate or investment decision, the company must carry out technology transfer to at least one Vietnamese company.

This announcement is welcome news for electronics manufacturing companies that had been hesitant about entering the Vietnamese market following the recent review of tax incentives, and it is expected to encourage further investment by foreign companies in Vietnam.